Interview: Grilling Tony “Byteball” Churyumoff – Legends of Crypto

Hi guys from Stuttgart today. You see Tony Churyumoff – the Founder and Lead Developer of Byteball. And I promised you to answer some of your questions. So, welcome in Stuttgart, Tony! And let’s start! Let’s start maybe with the most difficult questions because people ask a lot about witnesses. 12 witnesses. What can happen if a witness misbehaves? What can witness actually do to the network or to people’s transactions and so on…? One witness cannot do anything. If he misbehaves, first it will be immediately visible. How would I notice that as a user? What they’re supposed to do… they’re supposed to post the transactions serially. One after another. So, their next transaction on the DAG includes their previous transaction through parent-child links. Okay. If this is not the case… if there are 2 transactions that neither of them includes the other… It is immedietaly visible on the DAG. So, that is something that witness is not supposed to do. And we have a mechanism to change witnesses one by one. If we need to change one witness, users and other witnesses and businesses that are on the network can quickly change the witnesses… Okay. What happens physically on DAG if a witness misbehaves, doesn’t post the transactions sequentially? What could happen? Everybody sees it and everybody reacts by removing that witness from the list of witnesses… Yeah, I know. But can transactions disappear? Or can transactions be rolled back? There is certain margin, so that one misbehaving witness is no problem for the network. Okay. Many people have issues with trust in the Byteball network. It is a very centralized system compared to Bitcoin because in Bitcoin you have these thousands of miners who compete and… whatever. And there is no central entity that somehow manages that network. We have here different setting in Byteball. It’s kind of a private network. Because there is a foundation keeping the network right now running, developing the network, the protocol and so on. And on the other hand we have only 12 witnesses. So, it’s much more centralized in that sense. So, the question people have is… you can exchange these witnesses but you don’t even know who they are right now. So, you have the addresses in the full wallet but you don’t have the real names that you can really check. In the previous interview you said these people need to be real people. They need to have something to lose in their real lives. Like a business or some reputation. But what are they going to lose if users don’t even know who they are? So, is there any list that you can actually check these people, that run the witnesses right now? No, it’s very simple. All 12 witnesses that are spread from the default cap are run by me. So, you know that there is one real person behind them and this is me. So it’s even more centralized right now. It is very centralized because… yeah. So, from what I understand this is not a long term scenario. You’re going to acquire witnesses to run these servers. What are your efforts or are you aware of companies who want to run these witnesses or that would be willing to run these witnesses? Or how deos it look like right now? We are talking with several companies that potentially could run witnesses. But realistically, there is not very big chance right now that any really big companies will become witnesses. Because the network is not really well known. So, it is difficult to approach them. But yes, eventually I want the witnesses to be run by reputable companies which are household names. Which are trusted, which have something real behind them and which have something to lose if they misbehave. If people… let’s make a shout out here. Maybe there are some interesting businesses, interesting contenders so to say. For you tu run these witnesses. From the audience outside. If somebody wants to apply to run a witness, how can he apply? Well, first thing they have to say is that they want to be a witness. And say it publicly. You can discuss it with me or you may not discuss it with me but anyway, people should be able to know that you want to be a witness. So, a witness generally needs to run a normal full wallet, right? Yes. And then, should somehow post its address maybe on Slack? Or maybe on Bitcointalk forum and say “I want now to become a witness. Please add me to your full wallet.”? Yes. Say who you are, what are you going to do and post your address… And actually start posting something to the network before you announce that you’re going to be a witness. Okay. I wanted to thank Rand Al’Thor here in that place for his questions. This was one of his questions. Now a question by David M. How do you see the current situation in Byteball? I mean what’s the greatest challenge right now? How is it like from what you have expected one year ago or half a year ago maybe? And how do you judge the current situation and development? Well, currently on the development side, as you already know, we are pretty advanced. We have a working project. Which is very easy to use and has a lot of really useful features. And the main challenge now is adoption. We need more users. We need more developers that would create stuff on Byteball and make the network more useful for users. And attract more users to these applications and so on. So, the next thing which is in the focus of our attention is increase of our community size and adoption. Okay. Coming back a little bit to the centralization of Byteball. You know, generally the Byteball network or DAG is kept by full wallets, right? This is what the network generally consists of. And of course, there are these lite wallets attached to full wallets. Yeah. And right now, what would be the incentive to run a full wallet if you’re not a witness? Because all the bots run on full wallets. So, if the cost of running a bot is not covered by fees or whatever, what is the incentive to run wallet? Well, first of all some bots are really lite nodes. So, it’s not really required for any bot to run full node. So, the incentive to run a full node is because in many cases it is faster to do various stuff in the full node. Because you have the entire database locally. You can query any data that you’re interested in. Yeah, of course. But generally there will be increasing cost of running a full node, right? Because the DAG will take more and more space. And as the traffic increases this will also require more bandwith and so on. So, the cost will probably grow, right? Depending on how quickly the network grows. So, there will be a physical cost. Is there any revenue or incentive that you can draw from the network running a full wallet? First of all the cost is not really large, at least at the moment. The disk space is cheap. Yeah. But let’s compare it to Bitcoin. If you’re a miner, you have an economical incentive to run a full node. No, if you’re a miner, you dont have to run a full node. If you’re mining pool, you do have to run a full node. Yeah. But that’s okay. There are about 4-5 mining pools in Bitcoin that actually build more than half of the hash power now. Yeah, okay. But what I mean is to sustain the network. In Bitcoin it is important. There are full nodes but the miners are the ones who provide proof of work, that so to say write down the transactions. Or put them into blocks, produce blocks. The have an incentive, economical incentive to do that. The same work is provided by full nodes or by full wallets in Byteball network, right? Because they, so to say, attach the transactions to the DAG. And the question is what incentive do they have to do that actually? If they are not witnesses? Well, they might have some business in the network… profitable business. Okay. So, you say they will be the people who run some services based on Byteball. Or use Byteball as a payment network or payment processor or stuff like that, right? Yes, you have some stake in the network and it is also technically just more convenient to have a full node in order to access data. It is faster. It is cheaper than to query the network every time. So, in many cases it makes sense to run full nodes. It is more economic and makes sense. Okay. On the other hand, if you’re witness – right now the fees are extremely low, right? It has, of course, an advantage for the average Joe, for the average user. But on the other hand these fees are divided among witnesses, right? 50% of these fees are divided among witnesses. So, what is the incentive of becoming a witness because it may never become profiable actually? I mean depends on how Byteball price develops, right? Well, it might be profitable or not but anyway, it is not going to make you a lot of money by running a witness. Again, a witness is supposed to have something else on the network ideally. There might be some business that you’re running and you also are selected as a witness. So, in this case, by being a witness you are supporting own your own business because your business is on this network. Okay. Is it possible for a witness to somehow double spend? In which scenario are double spends possible? What would need to happen? Double spends cannot happen because if somebody submits a double spend, in case there is majority of honest witnesses, this attempted double spend will be ordered after the other transaction. And then it will be automatically rejected. Okay. And in case like we discussed before… In case the majority of the witnesses are rouge, if they try to double spend It will be immedietaly visible and nobody will accept those double spend transactions. Okay. And the network cannot continue without hard fork in this case. Aha. So, network would stop to operate actually. Yes. So, do you have something in protocol or in the wallet built in that signals: okay, we have a witness that doesn’t do the transactions sequentially? Is there a red flag or something? We don’t have it in the wallets but it might be a good security feature to notify users in case there is a collusion of witnesses to double spend. Okay. On the other hand, can sombody through a collusion of witnesses prohibit some people, some addresses from some transactions from happening? Actually yes. If the majority of witnesses are going to block somebody from posting transactions, They can say everybody not to include any transactions from this person because in this case we will not include your transactions. Yes, they can do it. But I dont think it is… But witnesses don’t include transactions. This is what full wallets do actually. Full wallets add transactions to the DAG, right? Yes. So, then witnesses don’t have power of excluding transactions from DAG actually, right? When they add their own transactions they include other transactions as parents. Okay. This way they can collude and decide: We don’t include this transactions. We never do it. It will stay unincluded forever. It is possible only if majority of witnesses agree to do it. Okay. If one witness tries to do it, it will rather exclude itself from the network. Okay. But again, it is not some major difference in Byteball from other networks. For example, in Bitcoin 5 mining pools agree to exclude transactions posting by for example North Korea. And they also agree to exclude any blocks mined by other miners that might include these transactions. They can do it because they have the majority of hashpower. And then the same happens actually, right? Yes. Okay. And we know there are like 3 mining pools they have over 51%… I don’t remember… there are about 3 or 5… Yeah. So, it’s even less than 7 witnesses in Byteball, right? Yes. Okay. Now a question by again Rand Al’Thor. Is there any plan to change the base trading unit from Gigabyte to Megabyte? Trading is not something that we rule. Trading is on exchanges. Okay. If exchanges want, they can do it. Obviously they are not very likely to do it themselves. They will probably listen to what developers say and I’m not going to say them “Change Gigabyte to Megabyte”. Okay. It is not a very good idea to change something that users got used to. As far as I know there were different attempts to change the basic unit of Bitcoin to MiliBitcoin or to something else. And they were not adopted. People are used to some units and it’s very hard to change it. What about your most effective marketing measures right now? What are they and what do you plan in the future, in the next months? Well, everybody knows from our Twitter posts that product is great but our marketing sucks. But we have some small successes recently. Since we have email attestation… email address attestation Which entails a small reward when you attest a whitelisted email address. And there is also another reward when you referr somebody who attests a whitelisted email address. We use this attestation to build a very large user base in 2 countries – Estonia and Venezuela. Okay. Because in Estonia they have government issued email addresses which are issued as 1 person to 1 email. Which is very important for email attestation because we don’t want anybody to attest thousands of emails and then receive thousands of rewards. And in Estonia we have recently launched a User-Thon program which was entirely set up by our community members. It was not created by our core team and it attracted a lot of attention in one of universities. Explain to the audience what is the User-Thon. User-Thon is a program designed to make people built some stuff on Byteball and make it used in the local community. To increase usage, to increase adoption. So, there is a contest. Users are invited to built projects on Byteball platform and get people from the local community to use them. And in order to seed the user base we also whitelisted the emails of this University. It is Simon Bolivar University in Caracas. And we have about 5000 new users from this university who attested the emails who received some rewards. Many of them referred users from the students’ community. So, this is so far the largest addition to our user base. So, you won 5000 users in Venezuela recently, right? Yes. Have you been to Venezuela? No. Okay. So, what do you plan as next measures? What do you see as the way to go in the realm of marketing? Well, as I said our main challenge now is adoption and we are going to use those attestation programs which are rewarded with some small money. And replicate it in various ways, for example we might want to do what we did in Venezuela… We might want to do it in other universities in other countries since it works so well. We didn’t expect such explosion of users. So, if you’re an university student and you would like to make Byteball popular at your university, signalize that in the comments here below. And you can do it also on Slack or Bitcointalk and get in contact with the team and you may be also rewarded for that. They will talk to you how to pull it off, right? Right. Okay. You said adoption is the main challenge right now. So, how many users do you have right now? How many merchants are also using Byteball? Well, it’s hard to estimate the number of users in anonymous network like Byteball. It should be roughly 30,000 – 40,000 users now.
[At publication time this number approaches 100,000 users!] What about merchants? Because this is so to say the other side of the adoption, right? Yes, it is also growing. We have our cashback program and very active our community member in Milan. Who built a huge network of local merchants of over 150. Wow, 150 already. Over 150 merchans. You know, once a year I am in Milan usually and I wasn’t aware last year that there was this kernel of Byteball. I could actually go to restaurant and pay with Byteball. What are the most exciting businesses in Milan that accept Byteball? There is a huge list on our website. Actually a map. I’d need to go there to say what is the most exciting one. Okay. So, if you’re a merchant and if you want to give 10% kickback to your customers, Get in touch with Byteball team on Slack, Bitcointalk or here in comments and you’ll be able to get discounts for your customers, right? Right. You need to aply. There is also a form to apply when you go to There is a link and then you can apply for this promotion, right? Yes. Or just search in Google for Byteball cashback program. Okay. Are there any interesting new partnerships coming as far as technology is concerned, maybe commerce is concerned? Something like that. Like Amazon or Ebay, you know. Not Amazon, not Ebay. Not yet! Not yet. Nothing that I can tell right now. Maybe we should mention that I am here in Stuttgart because we are participating in Hackathon. That is organized by Bosh. And there are several teams that are building products on Byteball platform and I’m here to help them. So, Bosh is experimenting with Byteball for their IOT applications actually, right? Yes, for IOT mostly. Okay. This is what IOTA is bragging about. IOT, Bosh and all these partnerships. Byteball is doing the same but they’re not bragging about that that much. We are just experimenting. Nothing to bragg about too much. You know, your main competitors or Byteball’s main competitors in this DAG space are IOTA, NANO, right? Yes. They have much higher transaction volume. How do you explain that or why do you think they have much higher transaction volume? What do they do differently and what can we learn from them or how can we improve Byteball to make it that much of a success? Let’s say to raise this transaction volume? Well, I guess they have much larger communities and it is the community who makes those transactions. Also, I guess the vast majority of those transactions are just transfers between exchanges and just an investment speculation. Not a real use that currency is supposed to be. Well, we are trying to build projects that are supposed to be used in real commerce. Such as smart contracts. We are the only DAG-based network which supports smart contracts now. Aplications should be relevant to users in the real world. Should be connected to something in the real world. That’s why just basic transfer of value is more or less pointless for a cryptocurrency. There are so many alternatives that work good enough. And what we are doing is building bridges to the real world wiith smart contracts which allow users to enforce that contracts on the distributed ledger to make the transactions safe and reliable. And multiple attestations that we rolled out on our network such as real name attestation, accredited investors attestation… Which build bridges with the real world and make possible some applications that require those bridges. For example for investment or for various financial projects you absolutely need to know the real name of the customer. Sometimes you need to know that to comply with regulations. You need to know that it is accredited investor. And there are many other use cases. So, one of my takeaways are… I just came several days ago from New York, from Consensus. One of my takeaways from Consensus was that security tokens will play a major role in the future. This will become an exploding market with a growth probably of x5000 in the next 10 years. Is it something that you’re strategically positioned in or you do you want to position yourself in that market? And offer solutions and maybe a platform for that market? We are doing exactly that. We are targeting the investment market with products that are built for security tokens. I think the investments market in the blockchain space is going to evolve from the Wild West stage which was in last year To a more regulated one where we will have serious institutional investors who use to play by the rules. And that’s why we need to build a platform for investment that is compliant with regulations What are your major competitors in that market what you say and what are your unique selling points? How are you different from your major competitors like Polymath for example? Well, today the major platform for fundraising in crypto space is Ethereum. Most ICOs are on Ethereum. But it is not very easy to comply with regulations when you do it on Ethereum. You have to do a lot of stuff yourself. What we do on Byteball we offer a platform for investors. So, what are the elements? You have… You have KYC… KYC – this is the real name verification, yeah? Yes. Then you have Accerdited Investor Verification, right? Then you have a payment gateway with VISA. When people issue a token on ICO or during an ICO, their customers can pay with VISA. Yes. Then you are building right now… you told me… A fiat gateway for bank payments. Okay, so this means when you participate in an ICO you can buy the token directly with your fiat money, with Euro for example. You just transfer your Euro to another bank account and it will appear on your Byteball wallet. The security token or let’s say the token. You will be issued with their security tokens. To your Byteball address, right? Yes. So, these are the elements? Is there anything else that we forgot about? And also the wallet where you keep those tokens and where you can just run your fundraising campaign from zero. Almost zero setup. Exactly. So, the teams running the ICOs just need to switch some switches in order to decide: “Do I need KYC? Do I need an accredited investors? Do I need payment with VISA or with Fiat money?”. Whatever, right? So, this is very user friendly so to say, right? Yes. Okay. User friendly and fundraiser friendly. Fundraiser friendly. Yeah, fundraiser friendly. This is what I meant. Okay. This question comes from Casper Niebe. If you were granted one wish related to Byteball, what would that be? For all other wishes to come true. So, what are the top 3 other wishes? We will invent them as we go. I would say probably more adoption right now. What do you plan as next steps in the project? In the development? I’d say… from what I see from the technical side… Byteball is probably one of the most developed cryptocurrencies on the market with the most funcionalities. But on the other side we see Byteball as a project, as a movement, as a community it is probably one of the smallest. So, what are the next steps you plan in the project generally? Not just technically. The next challenge for us is adoption; to attract more users to integrate projects that we build; to get more users. Of course, it will be more interesting for developers to develop on this platform where there are users. And then, more applications in the next cycle, more users, more applications. So, we do various steps to increase adoption, for example by using properly our undistributed funds to fund the growth of our user base. We don’t have to throw millions at every user. We need to do it wisely. Because we have limited funds. To acquire as many users as possible and grow the network. Okay. As I mentioned before, from the comments one of the issues people have to join the community is the issue and the question of trust. And one of the aspects of that is that most of the funds are in founder’s hand. In your hand or in the hand of the foundation. And you spend them, so to say, on community building, on growing the community. But the question people ask is how much of these funds are you going to keep yourself? I mean at the end. Is there something you would like to communicate or just say “Depends on how it develops” or whatever? Oh, like I said in the very beginning I am going to keep 1% of the total supply. Okay! So, you’re transparent with that, right? Yes. Almost last question. What about ICOs on Byteball platform? How many ICOs have taken place and how many are coming? Or are there any in preparations that you know about and so on? Well, there are about… as I remember 3 ICOs on Byteball platform. Can you say the names so people can check them out? Titan Coin, Silent Notary and Worldopoly. Okay, were they utility tokens or security tokens? They call themselves utility tokens… like almost everybody expect. Since we have this ICO platform almost finished, we are going to have a lot more ICOs in the coming future. There are some teams that we are in contact with. That will be launching a security tokens, right? Yes, they will probably be launching a security tokens. Okay. And we are going to partner with those companies, promote the ICOs, to promote our platform as a platform for their ICOs. Okay. If people from the community want to get involved, what are the areas you would like people to get involved and how can they get involved? Try the wallet, try the bots. Okay, you will find here below this video the links to How you can download the wallet and install the wallet. Try different features. If you’re a developer, see maybe and do something useful on the platform. There is also Byteball Wiki, right? Yes, there is Byteball Wiki. So, you can learn how to develop on that platform from there, right? There is Byteball Wiki which is for users and there is Wiki on our Github which was recently updated. And it has a lot of information for developers about how to develop stuff on Byteball network. So, it has a lot of opportunities for developers. A lot of built in blocks you can use in your applications. Just explore them on our Github Wiki and it will be great if you can build some interesting application. And if it is a chatbot, it can be added to the Bot Store and exposed to our users. So, it is very easy to reach them. Okay guys! Get your butt cheeks together and become a part of the Byteball revolution, right? Okay. Tony, it was a great pleasure having you here in Stuttgart. I wish you a lot of success with your platform. And see you around! We run into each other apparently in many places around the world. So, guys. Thank you for watching. I wish you a fantastic day today. Let’s do something extraordinary today!

4 thoughts on “Interview: Grilling Tony “Byteball” Churyumoff – Legends of Crypto”

  1. I think one very important answer to the question of whether or not it's profitable to run a witness remained unsaid.

    Imagine you have a business relying on the Byteball network to be up and running. Your business model generates a $2 million revenue and a $100,000 gross profit a year. Should the network stop working, your business can't generate the revenue and gross profit. People are often saying things like "but it's not profitable to run a full node" and to some extend they might be right.

    Running a full node and being a witness shouldn't really be a business case in itself, but merely seen as a tool to leverage your external business model. So in the above example, you could say that your financial incentive to run a full node and/or be a witness, is the $100,000 annual gross profit you're making because of the Byteball platform.

    Whether you earn $50 a month or have to pay $100 a month to run a full node, becomes incredibly irrelevant to your business case.

    You can probably best compare it to machines in a company's production line producing the products you sell. The machines have a running cost for power consumption, maintenance as well as a gradual loss of value due to wear and tear over time. Companies know their production equipment is worthless and needs to be replaced after a ie. 5 years. Now, does this cost prevent companies from buying new production equipment, that in isolation doesn't produce revenue or profit? Of course not.

    If the machines in your factory can produce products that you can sell with enough profit to easily cover the running costs of the machine, it overall becomes a positive return on investment and thereby a good business case to spend money on the machine.

    When your "machine" is the Byteball platform, and the revenue and profit you are able to generate because of it is good, the cost or profit of your "machine" shouldn't be seen in isolation.

  2. Can somewone make a video with him in a quiet place please!!! Marc s de Mesel video with Byteball founder has also bad audio:(

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